Sen. Allen joins committee majority to support elimination of medical program for the poor

Access to healthcare for roughly one in three Gila County residents hangs in the balance as lawmakers debate the fate of the Arizona Health Care Cost Containment System, which provides health care for 16,000 county residents and 1.3 million Arizona residents — half of them children.

District Five Sen. Sylvia Allen joined a majority of the Senate Appropriations Committee this week to approve a measure that would pull the plug on the whole program, which would save the state $1-2 billion but also turn away more than $7 billion in federal funding.

On the other hand, Gov. Jan Brewer continues to consider a less drastic plan to bar impoverished, childless adults from the program — a move that could throw about 4,000 Gila County residents off the AHCCCS rolls.

Overall, some 30 percent of Gila County’s residents are covered by AHCCCS, which mostly covers children living below the poverty line and medically bankrupt nursing home residents. The program also covers many low-income single mothers and some impoverished adults, plus the chronically mentally ill.

The prospects for people on AHCCCS and the rural hospitals that depend critically on the program have see-sawed in recent weeks.

Gov. Brewer’s budget for 2012-13 proposed a $540-million savings from stripping away coverage previously added by voters — in this case providing coverage for impoverished adults. That could cut 280,000 low-income adults from the AHCCCS roles.

However, the Arizona Hospital Association has appealed to the governor to impose some sort of a tax or fee to raise enough money to cover the state’s share of the cost of covering those 280,000. Hospitals rely heavily on AHCCCS to cover the cost of low-income, uninsured patients who come to emergency rooms. In large, urban counties, the county hospital shoulders much of that burden. But in rural areas, hospital executives say they would have a hard time staying open without help from AHCCCS paying those emergency room bills.

Brewer had appealed to the federal government for permission to cut the program, which is mostly funded by the federal government. The $540-million cut in state spending will trigger several billion dollars in reductions in federal spending in the state.

Many observers had expected the federal government to reject Brewer’s request, due to provisions in national health care law that prevent states from cutting their medical programs for the poor in advance of a wave of new federal funding for the program in 2014.

However, the federal Department of Health and Human Services replied that Arizona was free to reduce coverage and forego the federal matching funds. Arizona voters originally approved that expansion in coverage on the assumption that money from a national settlement with tobacco companies would cover the state’s share of the bill. Instead, most of the state share has come from the general fund.

However, the continued negotiations about cutting 280,000 adults from the AHCCCS rolls has now been overshadowed by Sen. Andrew Bigg’s SB 1519, which would shut down the whole program.

The bill would save the state about $2 billion, but would divert half that savings into a fund to provide health care for the developmentally disabled, the mentally ill and the medically indigent.

AHCCCS Director Tom Betlach said that money would not provide enough to cover care for even the state’s 50,000 most fragile residents, including the elderly and disabled.

The committee approved the measure on an 8-5 vote and sent it on to the senate floor. Sen. Allen said she voted for the measure to further the debate of the future of AHCCCS.

Previous budgets have already cut AHCCCS staffing by one third to 900, eliminated coverage for certain organ transplants, reduced mental health funding and frozen enrollment for Kids Care, which caused a big drop in the number of children with incomes just above the poverty line in the program.

About one in five Arizona residents rely on AHCCCS for their health care, most with incomes below the federal poverty line — which is $11,000 for a single person and $22,000 for a family of four.

Advocates say the state’s AHCCCS program operates on the health maintenance plan model and has the lowest per-patient cost, the lowest drug cost and the highest use of generic drugs of any Medicaid program in the country, with relatively high levels of patient satisfaction.

The cost of AHCCCS has risen faster than any other major category of state spending, especially after the recession caused a dramatic rise in the state’s poverty rate and a big drop in the number of people with private medical coverage.

In 2007, Medicaid accounted for 17 percent of state spending. In 2012, it will account for a staggering 29 percent of state spending. By contrast, state spending on K-12 education declined from 41 percent in 2007 to 37 percent in 2012.

State spending on most major categories has decreased in the past two years. Only spending on Medicaid, prisons and debt service have risen.

The number of people covered by Medicaid rose 133 percent between 2001 and 2010, while the state’s population rose just 20 percent. During that period, the number of people in state prisons grew 51 percent, the number of K-12 students grew 24 percent, the number of university students grew 34 percent and state revenues grew 5 percent — thanks in part to a series of deep cuts in the income tax rate.

As the recession deepened, Arizona’s poverty rate became the second highest in the nation, along with the percentage of the population without medical insurance.